NCLT Bengaluru clears Section 9 hurdle where corporate debtor fully admits liability

The Bengaluru Bench of the National Company Law Tribunal has reiterated that where an operational debt and corresponding default are clearly established and not disputed by the corporate debtor, an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 must be admitted, subject only to limitation and procedural compliance.

In Highway Star Rest And Recreation Pvt. Ltd. Vs Maiyas Restaurants Private Limited, the Tribunal admitted a Section 9 petition filed by an operational creditor under the IBC for non-payment of operational dues aggregating to ₹2,49,57,627, and triggered the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor.

Background of the commercial relationship

Revenue-sharing arrangement and nature of operational debt

The corporate debtor, Maiyas Restaurants Private Limited, was incorporated on 26.03.2014 with CIN: U15500KA2014PTC074445. It operated a restaurant from the premises of the operational creditor, Highway Star Rest and Recreation Private Limited, under a revenue-sharing model.

Under this arrangement:

  • The corporate debtor ran its restaurant business from the assessee’s (operational creditor’s) property.
  • Monthly invoices were raised by the operational creditor towards:
    • Revenue share / minimum guaranteed rent,
    • Reimbursement of utilities (water, electricity, DG charges, etc.), and
    • Marketing charges calculated as a percentage of revenue.

Over time, the operational creditor raised 194 invoices on the corporate debtor, cumulatively amounting to ₹1,57,00,516 towards the principal operational charges. The corporate debtor not only received these invoices but categorically acknowledged both the invoices and the total outstanding principal amount.

Build-up of default and repeated follow-ups

Despite continuous reminders, the corporate debtor failed to clear the dues. The defaults commenced from 31.10.2018 and continued thereafter.

Key aspects:

  • The operational creditor repeatedly demanded payment in accordance with the tax invoices.
  • The corporate debtor consistently cited severe financial constraints, conveying its inability to make payment in spite of such follow-ups.
  • No dispute was raised regarding the invoices, the quantum, or the quality of services/usage of premises. The only reason cited was financial distress.

Given the continued non-payment and mounting outstanding amount (including interest), the operational creditor eventually invoked the statutory remedies under the IBC.

Statutory demand under Section 8 and response

Issue of demand notice under Section 8 of the Code

On 18.07.2025, the operational creditor issued a statutory demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 (Annexure-G), duly served on the corporate debtor on 25.07.2025.

The notice:

  • Set out the details of the operational debt;
  • Enclosed information relating to invoices, dates of default and the cumulative outstanding;
  • Called upon the corporate debtor to pay the operational debt or raise a dispute, if any, within the prescribed period.

Corporate debtor’s reply: admission, no dispute, request for time

In its reply letter dated 28.07.2025, the corporate debtor:

  • Acknowledged the outstanding liability;
  • Did not contest the existence of the operational debt or the amount claimed;
  • Sought an extension of approximately six months to pay the outstanding dues in full;
  • Again relied upon its financial hardship as the only reason for non-payment.

At this stage as well, no pre-existing dispute regarding quality of services, invoices, or contractual terms was alleged.

Filing of Section 9 petition before NCLT Bengaluru

Petition and relief sought

On 18.02.2026, the operational creditor filed CP (IB) No. 40/BB/2026 under Section 9 of the IBC read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

The assessee (operational creditor) sought:

  • Initiation of CIRP against Maiyas Restaurants Private Limited;
  • Admission of the application as an operational creditor’s petition;
  • Directions for appointment of an Interim Resolution Professional (IRP), imposition of moratorium, and other connected consequential orders.

The total amount claimed as operational debt was ₹2,49,57,627, comprising:

  • Principal amount aggregating to ₹1,57,00,516 derived from 194 invoices; and
  • Interest component taking the overall admitted liability to ₹2,49,57,627 as on the date of filing.

Stand of the corporate debtor in objections

The corporate debtor filed its statement of objections on 13.03.2026, where it took an unequivocal stand that: